Can Big Data solve the customer engagement problem for utilities?

This is a contributed piece from John Webster, VP, Strategy and Marketing for Opower in Europe, Middle East and Asia-Pacific

The market for fitness trackers is huge. According to Gartner, 68 million are expected to be sold this year alone as hordes of fitness fanatics clamber to beat their own personal bests, as well as their friends’, in a social but competitive online environment that didn’t even exist a few years ago.

If there’s one thing we’ve learnt from the popularity of fitness trackers it’s that people not only welcome, but increasingly demand, a little “nudge” towards healthy habits to remind them to be more active. And this trend isn’t limited to personal fitness alone.

The application of ‘nudging’ and other behavioural science tactics, such as peer group comparison for example, are now employed across a host of industries including education and hospitality to help drive engagement.

The forerunners in energy - an industry plagued by apathy and distrust – have also recognised that some of the triggers that attract us to online games, competitions, points and rewards, can be used as part of an armoury to engage consumers, and over time, influence their behaviour. The aim for forward-looking utilities is to engage customers, by helping reduce energy bills, save energy and improve customer service.

The bedrock of any successful engagement programme is good data and utilities now have access to this by the bucket load. But currently, most customers receive monthly bills that reveal little more than how much they owe. Without the context from additional data points such as when and how they use their energy, it’s hard for consumers to better understand their relationship with energy – and more importantly, most consumers don’t really care that much anyway.

Utilities are under pressure to help consumers use less energy, as well as pressure from regulators and from a growing consumer expectation that their interests should be put at the heart of the utility business model. Utilities need to deliver value beyond that of a commodity supplier, transforming to become energy service providers. At the same time, customers are becoming more data savvy and are increasingly using gadgets to track exactly how smart they actually are. Utilities that are able to respond to customers with personalised, timely advice and insights will improve customer engagement, levels of trust and transparency, and improve retention.

Engagement

According to Accenture in its report Actionable Insights for the New Energy Consumer, the average European energy customer interacts with their utility for just nine minutes a year. Crucially, the use of engagement programmes enables utility companies to have more positive and fruitful conversations within the small windows of time they do have with their customers.

The rollout of smart meters across the UK by 2020 will provide the means for both customers and utilities to get significant new intelligence about energy usage. Smart meters provide readings as often as every fifteen minutes and this data can be segmented in a number of different ways to reveal trends, usage statistics and engagement opportunities. This can then be used to inform practical and personalised interactions.

For instance, the use of big data analytics by utilities can provide customers with high bill and unusual usage alerts, heating usage analysis and recommendations, and time of day usage analysis. Those tracking towards a high bill can take the appropriate action to bring their usage back to its desired level. It isn’t enough to merely present customers with the raw data that smart meters spit out. Customers need insights that they can act upon and the motivation to do so.

In this vein, our most successful tool has been offering neighbourhood comparison, insight that compares a household’s usage with that of their neighbours, playing on the behavioural phenomenon of “normative comparison”, or appealing to society’s wish to “keep up with the Joneses”. This approach gives customers anonymous insights about how successfully other people in their area are keeping their usage in check. Combined with personalised practical and timely advice, these insights are proven to “nudge” customers into making smart energy savings.

Opower’s use of these reports in Illinois, US, accounted for 34% of the state’s planned residential energy efficiency savings. Mercury Energy in New Zealand reported that customers participating in their programme have saved 3.4% more energy than consumers not using the technology. In general, Opower programmes see reduction of 1-2% consumption from their engaged customers. This non-intrusive informative engagement has the knock-on effect of increasing customers’ trust in their suppliers.

Statistics and personalisation lie at the heart of today’s online society. Our experience has shown that stats and personalised advice are also at the centre of driving engagement among demanding but often apathetic energy consumers. A bit of friendly competition can lead to a change that not only encourages increased energy efficiency, but also saves customers money and improves the quality of engagement utility companies have with their customers.

While energy use might not be the hottest topic at the water cooler, by providing valuable, practicable insights to customers, utilities can turn those crucial nine minutes a year into positive, informative experiences. Ultimately, their customers will love them for it.